- Bitcoin has bounced back from a significant slump in recent weeks.
- Dave Keller of Stockcharts.com thinks it will return to previous highs of $64,000.
- He also broke down for Insider why bitcoin is likely a better bet than ethereum right now.
Once again, bitcoin is on the come up.
After hitting its all-time-high above $64,000 in April, the cryptocurrency plummeted 53%, all the way down below $30,000 per coin in July.
Since then, the volatile asset has continued to rise and fall within that range. Over the last two weeks, its price has shot just about straight upward. Sitting currently at around $57,000, bitcoin is up about 39% since September 28.
That momentum is bound to continue, according to Dave Keller, the chief market strategist for Stockcharts.com who specializes in technical analysis.
Keller told Insider on Wednesday that he thinks bitcoin will return to its high around $64,000.
The first reason for this is that bitcoin has been able to break through the $50,000 barrier again after briefly doing so in September. It had struggled to do so since May.
Keller sees this as important because of what the level means for investor psychology.
“It’s widely followed in the technical community how prices tend to gravitate around big round numbers, and you find that a lot of times when stocks his $10 a share, or $100 a share, or $1,000 a share,” Keller said. “You’re seeing that with bitcoin when it’s at $30,000, and $40,000, and $50,000 or even $60,000. If you look back over the last year, pretty much every major turning point, or most of them, have been around a big round number like that.”
He continued: “Especially with bitcoin, that’s a way you psychologically understand the progress it’s making. You don’t talk about the percent return in bitcoin as much, you talk about it hitting a certain level.”
Another reason he expects bitcoin to continue rising is there is buying momentum behind it, measured by the relative strength index (at the bottom of the chart). The RSI measures how overbought or oversold an asset is.
If the RSI is near or above 70% as the price goes higher, it is a positive sign for further upside. This was the case in January, February, and March. However if the RSI is declining and well below 70% as the price rises, this shows weakness ahead. This was the case in April.
Right now the RSI sits above 66%, a positive sign, Keller said.
He said assuming bitcoin gets to $64,000, this will be the indicator he watches to gauge whether or not the bull run is out of steam.
If it isn’t, Keller said he will be watching for bitcoin to surge to around $98,000.
“One of the classic technical approaches is to take the height of a basing pattern, and to use the height of the pattern to project further upside targets,” Keller explained in a follow-up email. “For Bitcoin, we have the April 2021 high around 64K and the July 2021 low right at 30K so a total range of 34K (64K-30K). Given an eventual break above 64K that would project an upside target around 98K (64K+34K).”
Several others names in the space — like Charles Edwards of Hash Robbins and crypto influencer Adrian Zduńczyk — in recent months have also predicted that bitcoin would rise to $100,000 or more. Others, meanwhile, like JPMorgan CEO Jamie Dimon, have to continued to call it “worthless.”
Why bitcoin looks better than ethereum right now
Based purely on technical analysis — or analysis of price movements absent fundamentals — Keller said he believes bitcoin offers a better opportunity for investors than ethereum at the moment.
This is because ethereum, which he thinks used to follow bitcoin’s price movements more closely, hasn’t eclipsed recent highs around $3,950 yet, even thought it is up almost 30% over the last few weeks. Bitcoin, meanwhile, has done that.
But even more concerning for Ethereum, Keller said, is that its RSI reading also isn’t as strong as bitcoin’s at the moment, showing weaker momentum.
“It’s trying to make a new high, but the momentum is actually a lot less than it was there in August and September. So it’s less constructive of a technical setup than you saw with bitcoin,” he said.
Keller said, however, that ethereum’s overall set up is constructive as long as it remains above the $2,750 support level it recently bounced off of. He said to watch for it to return to previous highs of $4,000 at some point.